a balanced e&p portfolio of low-cost, low-risk ... · oil capital presentation september 2015...

Oil Capital Presentation

September 2015

ASX: ZTA | www.zetapetroleum.com

A balanced E&P portfolio of

low-cost, low-risk conventional

gas and oil assets focused on-

shore Romania that underpins

a compelling valuation

Zeta Petroleum plc | Oil Capital Presentation | September 2015

Disclaimer

The information in this presentation is an overview and does not contain all information necessary for investment decisions. In making investment decisions, investors should rely on their own examination of Zeta Petroleum Plc and consult with their own legal, tax, business and/or financial advisors in connection with any acquisition of securities. The information contained in this presentation has been prepared in good faith by Zeta Petroleum Plc. However, no representation or warranty, expressed or implied, is made as to the accuracy, correctness, completeness or adequacy of any statement, estimates, opinions or other information contained in this presentation. Given the highly speculative nature of exploration for oil and gas, there are significant uncertainties associated with forecasting future revenue. Certain information in this presentation refers to the intentions of Zeta Petroleum Plc, but these are not intended to be forecasts, forward looking statements, or statements about future matters for the purposes of the Corporations Act or any other applicable law. Information about potential cash-flows are conceptual in nature and will only occur upon successful outcome on future events, which cannot be guaranteed. The occurrence of events in the future are subject to risks, uncertainties, and other factors that may cause Zeta Petroleum Plc’s actual results, performance or achievements to differ from those referred to in this presentation. Accordingly, Zeta Petroleum Plc, its directors, officers, employees and agents do not give any assurance or guarantee that the occurrence of events referred to in this presentation will occur as contemplated.

The information provided in this presentation that relates to Zeta Petroleum Plc’s hydrocarbon reserves, contingent and prospective resources is based on information complied by Mr Bogdan Popescu who is a competent person as defined in Listing Rule 5.41. Mr Bogdan Popescu has consented in writing to the inclusion of the information provided in this presentation that relates to Zeta Petroleum Plc’s hydrocarbon reserves in the form and context in which it appears here. Mr Bogdan Popescu is a non-executive director of Zeta Petroleum Plc.

2

Key Facts

Operating Cash Flow breakeven within sight

Current Reserves and Resources to fuel growth

New Management hitting Milestones

CPR Portfolio Valuation approx. US$45m

Focused on a conventional

onshore low-cost, low-risk O&G

portfolio in Romania

Zeta Petroleum plc | Oil Capital Presentation | September 2015 3

Capitalisation and Major Shareholders

Share Price 13 cents

Market ASX

Ordinary Shares in Issue 7.25M

Ticker ZTA

Market Capitalisation AUS$0.94m

Convertible Debt AUS$3.3m

Less Cash at 31 Dec 14 AUS$1.0m

Enterprise Value AUS$3.24m


The Company benefits from a supportive major shareholder in GM Investment & Co Limited (“GMI”)

GMI has an extensive history of investment in the Company and has provided support for its business

activities and operations since March 2006

GM Investment & Co Limited 29.9%

Hot Chilli Investments 9.67%

A Morrison SIPP 7.48%

B Popescu 6.83%

Cresthaven Investments 4.23%

B Hodges 3.49%

HSBC Custody Nominees 3.45%

Other 34.05%

Summary of Value Proposition


Zeta Petroleum PLC

On-shore production Low-risk EU jurisdiction

Strong recent track record Value Gap

An excellent platform for growth

Senior Management


Andy Morrison

Chief Executive Officer

Andy has substantial senior level experience in the oil and gas sector having worked for over 25 years in strategic and international business development roles with major energy companies including Shell, BG Group and BOC Group before joining the small-cap oil and gas sector in 2007. Since 2007, Andy has held Chief Executive roles at Xtract Energy plc, an AIM quoted energy company and Silvermere Energy plc, which he saw through asset acquisition, AIM admission and into first production in the US. Andy has a BSc (1st Class) in Chemical Engineering and Fuel Technology from the University of Sheffield.

Ben Hodges Chief Financial Officer & Company Secretary

Ben is a qualified Certified Practicing Accountant (“CPA”) with over 20 years experience including 11 years in oil & gas both at BP plc and Zeta Petroleum. He was previously Chief Financial Officer of AIM quoted Atlantic Coal plc and has served as Chief Financial Officer for Zeta Petroleum since September 2013. He has earned a Diploma in Carbon Management post CPA qualification.

Romania: Established Oil/Gas Province


Proven hydrocarbon systems

Established oil & gas industry

ExxonMobil, OMV, Gazprom and independents present

Educated local work force

Attractive Fiscal Terms

Developed Energy Infrastructure

Member of the EU since 2007

Assured access to domestic market

Price deregulation well advanced

Focused on a conventional

onshore low-cost, low-risk O&G

portfolio in Romania

Balanced Portfolio already in place


Gas Production

and Appraisal

In production

Shallow gas at

400-1,000m

Multiple leads

and prospects

Gas Field

Re-development

Project

Significant

upside value

potential

Oil and Gas

Field

Appraisal and

Development

Gazprom

Operator

Zeta 50%

Zeta 100%

Zeta 39%

Valuation underpinned by CPR


As at 31 December 2014: Source: Competent Persons Report: Rockflow Resources

P50/Pmid P50/Pmid

Reserves Gross Bcf

Net Attributable Bcf

Suceava 1.88 0.94

Contingent Resources

Gross Bcf


Suceava 2.06 1.03

Bobocu 22.67 22.67

Prospective Resources*

Gross Bcf


Bobocu 11.70 11.70


Gross MMstb

Net Attributable MMstb

Jimbolia 0.75 0.29

Summary of Reserves and Resources

P90 P50/Pmid P10

Reserves

Suceava 2.0 2.3 2.8


Suceava 2.0 4.0 6.9

Bobocu 1.1 38.9 108.4

Valuation: Net Attributable NPV10 US$m

* The estimated quantities of gas that may potentially be recovered by the application of a future development of these prospective resources relate to undiscovered accumulations. These estimates have both an associated risk of discovery and a risk of development. Further exploration, appraisal and evaluation are required to determine the existence of a significant quantity of potentially moveable hydrocarbons.

Suceava (50%): Growing Cash Flows


Climauti: Well-head

Dornesti: Gas to Power Plant

Bilca Processing Plant: Raffles Energy (Op.)

Climauti • Producing since March 2011 • Currently producing c. 420mcfpd • Generates gross revenue c. US$ 40,000 per month • Gas processed at Bilca Plant; Raffles Energy, Operator

Ruda • Discovery made December 2014 • Scheduled on-stream September 2015 • Expected to increase production to c. 850mcfpd

Dornesti-Sud • Brought on-stream December 2014 • Currently producing 0.9MW • Generates gross revenue c. US$ 20,000 per month • Permission pending to increase production to 1.2MW

Granicesti • Existing discovery tested at 900mcfpd • Scheduled on-stream 2016

Raffles Energy (50% and Operator)

Bobocu (100%): Substantial Gas Project


Bobocu-310 well drilled in 2012

Gas shows Modern logs acquired

Proposed side track To access remaining gas in G lobe Targeting up-dip area c.500m south of the existing well

Historic gas field with considerable re-development potential

• Cumulative production: 32.91 Bcf from 31 wells over 1977-2001

• Remaining recoverable resources (PMid) up to 34.37 Bcf

• Productive reservoirs at 2,500-2,700m depth

• Close to infrastructure and markets

• 75km2 3-D seismic acquired in 2010

• Appraisal Well Bobocu-310 drilled in 2012

• Bobocu-310 side-track scheduled for late 2015

• Farm-out discussions progressing to provide funding

* PMid Contingent Resources 22.67 Bcf, plus Prospective Resources 11.70 Bcf as at 31 Dec 14 as per CPR

Milestone Delivery 2014-15


May 2014 New management team

Q2 / Q3 2014 Strategic review: focus on monetising portfolio

September 2014 Additional US$2m loan secured

November 2014 Technical work programme on Bobocu concession completed

December 2014 Commissioned Dornesti-Sud Gas to Power Project; increased monthly revenues

December 2014 Additional Gas discovery at Ruda-1 well

January 2015 Suceava appraisal concession extended

April 2015 SP Angel Initiation Research published

June 2015 Competent Persons’ Report Updated

June 2015 Bobocu Farm-out exclusivity period agreed

Business development • Prioritised • Pipeline strengthened

Financial commitment • Brought under control

Effective Partnership • Sound business partners

identified

CPR • Compelling valuation • Assets underpin value

Forward Work Programme 2015-16


Current London listing (target by end Q4‘15)

September 2015 Commission Ruda-1 gas production at Suceava

September 2015 Complete Bobocu farm-out

September 2015 Increase Dornesti-Sud production to 1.2MW

December 2015 Perform Bobocu-310 side-track or equivalent

March 2016 Additional seismic to mature Suceava prospects

September 2016 Re-testing Granicesti discovery well at Suceava

On-going Evaluate value-adding new ventures in Romania

Focus • Delivering programme

in Romania Develop and Monetise • Existing in-country

development pipeline Growth • Remain open to wider

opportunities

Key Value Drivers and Opportunities


Increased Production

Resource Upgrades

Portfolio of Projects

Near Term Growth

“Blue Sky” Potential

Low Execution

Risk

Distinctive profile • c.f. Junior peers New Management • Delivering on

milestones Risks Mitigated • Production &

reserves Low cost, low risk

• Successful appraisal / exploration

Contact


Andy Morrison Chief Executive

Zeta Petroleum plc

T: +44 (0)7980 878 561

E: [email protected]

Ben Hodges CFO & Company Secretary

Zeta Petroleum plc

T: +44 (0)7739 227 092

E: [email protected]

mailto:[email protected]

mailto:[email protected]

Appendix: And another thing…...


Well-head “Christmas Tree” at Bobocu-310

Suceava: Attractive Returns


Key Assumptions Estimated drilling costs – US$1 million per well Estimated tie-back costs – US$1.2 million per well Gas sales price at current levels. Scope for increased IRR with further deregulation Production flow rates – P50 per Competent Persons Report announced 9 March 2015

Shallow low cost wells on Suceava licence Estimated Economic Indicators NPV10 IRR Granicesti SE-1 US$1.8m 44% New Suceava well US$1.6m 35%

-

200

400

600

800

1,000

1,200

1,400

1,600

Year 1 Year 2 Year 3 Year 4

US$'000 New Well Attributable Economics

Gross sales income US$'000

Net cash flow US$'000

Gross margin of approx. 60%

Jimbolia (39%): Discovered Oil and Gas


Jimbolia-100 well Oil and gas discovery

Autumn 2014 Successful gas test

Currently Evaluating

commerciality

Located in Eastern Pannonian Basin; a proven province

• Two discoveries by Petrom in 1983; Veche and Vest

• Farm-out 51% to Gazprom subsidiary NIS in October 2012

• NIS (Gazprom) funded and operated Jimbolia-100 well

• Oil flow achieved but high CO2 co-production

• Additional Gas Zone testing conducted in 2014

• Well suspended pending further evaluation

Partners Zeta 39% NIS Petrol SRL 51% (Operator) Armax Gas 10%

Further Upside: Appraisal & Exploration


Prospect bcf

HJ South West 2.54

HJ West 4.92

J South 1.85

J North 1.48

K2 West 0.91

TOTAL 11.70

Bobocu Prospective Resources

5 Additional Targets

Suceava Lead Inventory

Unrisked Bcf

Risked Bcf

Ceplenta S312 9.01 2.25

Bosancea 170 8.51 2.13

Caplentia S310 6.40 1.60

Dolhasca 205 36.35 9.09

Bosancea 040 16.21 4.05

TOTAL 76.48 19.12

• Defined Leads and Prospects at Suceava and Bobocu • Exploration potential in northern sector at Jimbolia • Further drilling opportunities that will be subject to funding

2020 Vision: Production & Value Pathway


ILLUSTRATIVE PRODUCTION AND CASHFLOW GROWTH

-

0.050

0.100

0.150

0.200

0.250

0.300

0.350

0.400

2014 2015 2016 2017 2018 2019 2020

Mmscf/day Gross Production

New Suceava Well Mmscf/day

Total Gross Suceava discoveries &Bobocu Mmscf/day

-

5,000

10,000

15,000

2014 2015 2016 2017 2018 2019 2020

US$'000 Net Attributable Production Cashflow

Net incremental cashflow - NewSuveava well US$'000

Net Cashflow US$'000

Key Assumptions 1. Gas prices at current levels 2. Successful farm-out of 50% interest in Bobocu licence 3. Subject to Government approval of field development plan and subject to funding

NPV Assumptions

The NPV valuation included in this presentation is based on the following material

assumptions:

Resources and contingent reserves as at 31 December 2014

Inflation rate of 3%

Discount rate of 10%

3.6873 RON per US$ and 4.4752 RON per € exchange rates

Continuation of deregulation of Romanian gas price to market price


Zeta Group Structure


Board of Directors


Stephen West Non-Executive Chairman BCom, CA

Stephen is a founding Director and former Managing Director of Zeta. He is a Chartered Accountant with over 20 years’ financial and corporate experience ranging from public practice, investment banking, oil & gas and mining. Stephen is Finance Director of Oslo Axess listed African Petroleum Corporation Ltd (OAX:APCL) and also Non-Executive Director of Apollo Consolidated Limited (ASX:AOP), an ASX listed gold exploration company with assets in Australia and the Cote d’Ivoire. He has held previous senior positions at Barclays Capital and PricewaterhouseCoopers.

Oliver Cairns Non-Executive Director

Oliver has over 16 years experience in the small-mid cap corporate and capital markets space. Previously he was a corporate financier and Nominated Adviser for AIM companies in London for over 8 years having joined Blue Oar Securities Plc (now Northland Capital Partners Limited) in July 1999. In May 2009, Oliver set up Pursuit Capital, a corporate advisory and investment house based in Perth, which is focussed on long term corporate, capital and strategic involvement with junior international companies. He is also a Non-Executive Director of ASX and AIM listed Vmoto Limited, a global electric scooter company.

Timothy Osborne Non-Executive Director LLB

Timothy is a qualified solicitor and is currently the Senior Partner at Wiggin Osborne Fullerlove solicitors, London. He is also a Director of GML Limited, a diversified financial holding company which owned strategic stakes in a number of Russian companies, including a majority shareholding in Yukos Oil Company (previously Russia’s largest oil company).

Bogdan Popescu Non-Executive Director PhD, MSc, BSc, AAPG, RGS, EAGE

Bogdan is an oil industry specialist and NAMR certified expert with extensive international experience. His former appointments include Executive Senior Vice President of The Rompetrol Group (2003-2006), Senior Vice President (Australia) and CEO (Switzerland) of Millennium Group of Companies (1999-2003), various positions at Petroconsultants SA/IHS Energy (1980-1999) and Earth Sciences Researcher at the Institute of Geology and Geophysics (1968-1979). Bogdan is currently the elected Past President of the Petroleum Exploration & Production Managers Forum in Romania. He joined Zeta in 2006.

Greg Hancock Non-Executive Director

Mr Hancock has over 25 years experience in capital markets practicing in the area of Corporate Finance. He has extensive experience in both Australia and the United Kingdom specialising in mining and natural resources. He was a founding shareholder and first Chairman of Cooper Energy Ltd (ASX:COE) and is Chairman of Ausquest Ltd (ASX:AQD).

Zeta’s Offices


Bucharest, Romania

Main operations office located in Bucharest

Employ local expertise

Ability to effectively work with the local agencies and Romanian

based companies

London, United Kingdom

Corporate management is located in London on Berkeley Street

Good access to the capital markets of London and to be available to

UK and European shareholders

Compliance office in West Perth, Australia for ASX purposes

Suceava: Current Development Plans


Development Plans

Increase Dornesti Sud to 1.2MW

Bring Ruda-1 on-line

Dense 2-D to find further

analogues

Test and bring on Granicesti (SE-1)

Further potential in

southern area

a balanced e&p portfolio of low-cost, low-risk ... · oil capital presentation september 2015...

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